Correlation Between Guangzhou and Capital Clean
Can any of the company-specific risk be diversified away by investing in both Guangzhou and Capital Clean at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Guangzhou and Capital Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangzhou RF Properties and Capital Clean Energy, you can compare the effects of market volatilities on Guangzhou and Capital Clean and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Guangzhou with a short position of Capital Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou and Capital Clean.
Diversification Opportunities for Guangzhou and Capital Clean
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Guangzhou and Capital is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou RF Properties and Capital Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Clean Energy and Guangzhou is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Guangzhou RF Properties are associated (or correlated) with Capital Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Clean Energy has no effect on the direction of Guangzhou i.e., Guangzhou and Capital Clean go up and down completely randomly.
Pair Corralation between Guangzhou and Capital Clean
Assuming the 90 days horizon Guangzhou RF Properties is expected to generate 6.82 times more return on investment than Capital Clean. However, Guangzhou is 6.82 times more volatile than Capital Clean Energy. It trades about 0.12 of its potential returns per unit of risk. Capital Clean Energy is currently generating about 0.07 per unit of risk. If you would invest 11.00 in Guangzhou RF Properties on September 21, 2024 and sell it today you would earn a total of 12.00 from holding Guangzhou RF Properties or generate 109.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Guangzhou RF Properties vs. Capital Clean Energy
Performance |
Timeline |
Guangzhou RF Properties |
Capital Clean Energy |
Guangzhou and Capital Clean Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Guangzhou and Capital Clean
The main advantage of trading using opposite Guangzhou and Capital Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou position performs unexpectedly, Capital Clean can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Capital Clean will offset losses from the drop in Capital Clean's long position.Guangzhou vs. BCE Inc | Guangzhou vs. Amkor Technology | Guangzhou vs. Analog Devices | Guangzhou vs. Meiwu Technology Co |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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